Donald Trump on Tax Reform

Comparison of Warren wealth tax to Trump wealth tax

Sen. Elizabeth Warren wasn't the first major American politician to put the idea of a tax on large fortunes. Trump's plan, as articulated during a 1999 flirtation with a Reform Party presidential bid, differed from Warren's in three important respects:

He wanted the tax to be a one-time levy that would reduce the national debt and therefore reduce interest service payments. Warren's plan would simply levy a smaller tax each year.

He wanted a fairly hefty rate--14.5%--that would have
required a lot of rapid-fire liquidation of business assets. Warren's rate structure is much lower than that.

He set the threshold for his tax lower. While Warren wants to tax fortunes worth more than $50 million, Trump proposed taxing wealth
starting at $10 million. This was in 1999; in inflation-adjusted dollars, that's $15 million.

By setting a high one-time tax rate, Trump created enormous avoidance incentives and never came up with a plan to deal with them.

People want tax cuts; don't understand tax reform

We passed the biggest tax cuts in the history of our country and it was called tax cut and reform. And I said to our people, "don't use the word reform."
Because we're going to go with "the tax reform act." I said "no wonder for 45 years nothing has been passed. Because people want tax cuts.
And they don't know what reform means." Reform can mean you're going to pay more tax. And now it was called "the tax cut act and jobs," we had to add
jobs into it, because we're picking up a tremendous number of jobs. 2.7 million jobs. 2.7. So now people hear tax cuts, and it has been popular.

Doubled standard deduction for all; average $2000 tax cut

Just as I promised the American people from this podium 11 months ago, we enacted the biggest tax cuts and reforms in American history. Our massive tax cuts provide tremendous relief for the middle class and small businesses.

To lower tax rates for hardworking Americans, we nearly doubled the standard deduction for everyone. Now, the first $24,000 earned by a married couple is completely tax-free. We also doubled the child tax credit.

A typical family of four making $75,000 will see their tax bill reduced by $2,000--slashing their tax bill in half.

This April will be the last time you ever file under the old broken system--and millions of Americans will have more take-home pay starting next month.

1991: Reagan tax cut a catastrophe; 2017: Reagan led economy

Donald Trump's speech touting tax cuts--the largest ones ever, he promised--was devoted in large part to praise of the 1986 Tax Reform Act. "Our last major tax rewrite was 31 years ago," he said. "It was really something special In 1986,
Ronald Reagan led the world, cutting our tax base by 34 percent. Under this pro-America system, our economy just went beautifully through the roof."

Trump has long attacked the 1986 Tax Reform Act as a disaster.
The Act eliminated tax advantages for real estate, and Trump naturally equated the loss of special treatment for his own industry with harm for the economy as a whole. "This tax act was just an absolute catastrophe for the country," he told
Congress in 1991. Eight years later, still fuming that Senator Bill Bradley (D-NJ)--a co-sponsor of the law--was running for president, Trump called it "one of the worst ideas in recent history."

OpEd: 1986 tax reform was revenue-neutral; 2017 reform isn't

[In a speech this week promoting proposed 2018 tax cuts], Trump lavished praise on Reagan's tax reform, which he once called a 'catastrophe.'

One might wonder why Trump reversed himself. The answer is, he really hasn't. Republicans have used the
aura of the 1986 Tax Reform Act to promote their tax-cut plans. But what they have in mind now is quite different. The 1986 Tax Reform Act was a bipartisan law, which did not reduce revenue to the government, and actually increased the effective tax
rate paid by the rich by eliminating special treatment for capital gains and other tax breaks for the rich. Some Democrats have offered to support legislation along those lines, but the Republican leadership has outright refused.

It's not clear whether Trump realizes the law he praised at length [this week] is the same one he previously accused of destroying the American economy.

Cutting corporate taxes will be a great job creator

Donald Trump has clearly embraced Reagan's voodoo economics. Cutting corporate taxes, he declared in September 2016, is "going to be a job creator like we haven't seen since Ronald Reagan." Trump clearly believes that he can ignore all the data and
analysis that showed that trickle-down economics was pure fiction. Why? Because in Trump World, facts don't matter: he knows in his golden gut that once the tax cuts kick in, the economy will grow so fast that the new tax revenues will more than
make up for the money lost from tax cuts. There it is, the same old trickle-down lie.

Trump isn't alone in his stubborn belief in trickle-down economics. Senate Majority Leader Mitch McConnell has said pretty much the same thing, and
Speaker of the House Paul Ryan has also chimed in, calling tax cuts for rich people the `secret sauce" that will help poor and middle class families. Evidently, all the current Republican leaders were issued the same songbook.

FactCheck: Cutting carried interest gains $18B in revenue

The "carried-interest tax loophole" allows managers of investment funds to treat the bulk of their
earnings as long-term capital gains instead of income. The current tax rate on capital gains for higher-income tax brackets is 20%. The ordinary tax rate for the same ultra-wealthy class is 39.6%. This tax break benefits only about 2,000 people in the
country. The Congressional Budget Office estimates that taxing carried interest at ordinary rates would net $18 billion over 10 years. ["Capital and Main," by Judith Lewis Mernit, June 21, 2016]

In plain English, yes, Trump is proposing getting
rid of a tax loophole that would raise taxes on a few wealthy people, and lower taxes by $18 billion overall (if the revenue were distributed in a way that benefited other taxpayers).

Get rid of carried interest and cut taxes big league

Q: What specific tax provisions will you change to ensure the wealthiest Americans pay their fair share in taxes?

Trump: One thing I'd do is get rid of carried interest. One of the greatest provisions for people like me, to be honest with you, I give
up a lot when I run, because I knock out the tax code. Clinton could have done this years ago, by the way. She was a US senator.

Clinton: When I was a senator, I did vote to close corporate loopholes. I voted to close one of the loopholes he took
advantage of when he claimed a billion-dollar loss that enabled him to avoid paying taxes.

Trump: We have corporations leaving--massive corporations and little ones, little ones can't form. We're getting rid of regulations which go hand in hand with
the lowering of the taxes. We're bringing the [corporate] tax rate down from 35% to 15%. We're cutting taxes for the middle class. We are cutting them big league for the middle class. Clinton is raising your taxes and I'm lowering your taxes.

OpEd: Can't release tax returns while under audit? Nixon did

KAINE: Trump started this campaign in 2014 and he said, "If I run for president, I will absolutely release my taxes." He's broken his first promise. Second, he stood on the stage last week and when Hillary said, "you haven't been paying taxes,"
he said, "That makes me smart." So it's smart not to pay for our military? It's smart not to pay for veterans? It's smart not to pay for teachers? And I guess all of us who do pay for those things, I guess we're stupid.

PENCE: [Trump] is going to release his tax returns when the audit is over.

KAINE: Richard Nixon released tax returns when he was under audit.

FACTCHECK: When asked about Trump's assertion, the IRS said in a statement, "Nothing prevents individuals
from sharing their own tax information." But while tax law does not prevent Trump from releasing his returns, waiting until his audit is completed may be beneficial, experts said.

I'm gonna cut taxes and regulations big league

[Clinton is] going to approve one of the biggest tax increases in history. [Clinton is] going to drive business out. [Clinton's] regulations are a disaster, and [Clinton is] going to increase regulations all over the place.
My tax cut is the biggest since Ronald Reagan. I'm very proud of it. It will create tremendous numbers of new jobs. But regulations, you are going to regulate these businesses out of existence.
When I go around, despite the tax cut, the things that business as in people like the most is the fact that I'm cutting regulation. You have regulations on top of regulations, and new companies cannot form and old companies are going out of business.
And you want to increase the regulations and make them even worse. I'm going to cut regulations. I'm going to cut taxes big league, and [Clinton is] going to raise taxes big league, end of story.

Tax cuts for the wealthy, who will create tremendous jobs

Q: You're calling for tax cuts for the wealthy?

A: I'm really calling for major jobs, because the wealthy are going create tremendous jobs. They're going to expand their companies. I'm getting rid of the carried interest provision. And if you really
look, it's not a tax. It's really not a great thing for the wealthy. It's a great thing for the middle class. It's a great thing for companies to expand. And when these people are going to put billions and billions of dollars into companies, and when
they're going to bring $2.5 trillion back from overseas, where they can't bring the money back, because politicians like Secretary Clinton won't allow them to bring the money back, because the taxes are so onerous, and the bureaucratic red tape is so
bad. It's probably $5 trillion that we can't bring into our country. With a little leadership, you'd get it in here very quickly, and it could be put to use on the inner cities and lots of other things, and it would be beautiful.

Repeal estate tax; it's double taxation

TRUMP: Well, the thinking is we have the highest tax rate in the world. We have $2.5 trillion overseas that isn't coming back into this country.
So what I'm doing is large tax cuts, especially for the middle class.˙We're going to have a dynamic economy.

Q: But there are two concerns. The Conservative Tax Foundation, says that over 10 years, you would add $10 trillion to the deficit.
And there's also the question of who would benefit under your tax plan. The Foundation says the middle class would see after tax income increase 7.2%. The top 1% would see a spike of 21.6%.
So between that and ending the estate tax, the Trump family and folks like you would make out great.

Estate tax is unfair double taxation

Q: Under your tax plan, your family would make potentially hundreds of millions of dollars by eliminating the estate tax.

TRUMP: The estate tax is a horrible weapon that has destroyed many families.
In particular, farms and things where they make an income and they have a certain value and they have to go out and borrow money and they put mortgages on their farm.
Let's say it's a business that's not very liquid, and people have to go out and borrow against the business, you are having travesty.
And the other thing is, it's a double taxation. The tax has already been paid. I mean you've been hearing this argument for many years.

Do away with carried interest; it's unfair

Q: Let's talk about your tax plan. You have said that this tax plan is going to cost you a fortune. How do you get there?

TRUMP: It will cost me a lot of money. I have carried interest, like a lot of other people do, and carried interest is a wonderful
thing, but it's unfair.

Q: But that's $20 billion over 10 years for everyone who has it. That's a small--

TRUMP: But it's psychologically so important. If the economy grows, we all make it up. I mean, frankly, the job producers make it up.

Source: ABC This Week 2015 interview by Martha Raddatz
, Oct 4, 2015

OpEd AdWatch: Trump more liberal on taxes than Democrats

A lawyer for Donald Trump fired off a letter to the conservative Club for Growth threatening a `multi-million dollar lawsuit` if the group does not pull its TV ad claiming Trump `supports higher taxes.` Trump's lawyer says the claim is false & libelous.
Club for Growth Action, the super PAC of the anti-tax group, says it is merely exposing Trump's `very liberal` record. So who is right?

Asked for backup, the Club for Growth referred us to a Feb. 15, 2000, article in The Advocate in which
Trump states, `My plan to impose a onetime net worth tax of 14.25% on the super-wealthy, when combined with our current projected surpluses, will raise enough to pay off the national debt.` But Trump isn't advocating anything like that in 2015.

FactCheck: Proposed 14% tax on wealthy in 2000, but not now

A Club for Growth attack ad says that in 2000, Trump stated, `My plan to impose a onetime net worth tax of 14.25% on the super-wealthy, when combined with our current projected surpluses, will raise enough to pay off the national debt.` At that time,
Trump was mulling a presidential bid, and in a formal statement in November 1999 that laid out his plan, Trump did, in fact, propose a one-time 14.25% tax on people and trusts with a net worth of over $10 million (minus the value of their principal
residence). The revenue it generated, he said, would be used to pay off the debt, then $5.7 trillion, to give a middle-class tax cut and to shore up the Social Security trust fund.

But Trump isn't advocating anything like that in 2015. On Aug. 18,
Trump said he would not propose changes that increase the net amount of taxes. But he also stopped short of agreeing to sign the Americans for Tax Reform pledge against raising taxes because `I may want to switch taxes around.`

No net increase in taxes, but increases on wealthy

On Aug. 18, Trump said he would not propose changes that increase the net amount of taxes. But he also stopped short of agreeing to sign the Americans for Tax Reform pledge against raising taxes because `I may want to switch taxes around.` Specifically,
Trump has repeatedly said that he would lower taxes for the middle class and would raise taxes on `carried interest` earned by hedge fund managers.

In an Aug. 26 interview, the host noted that `carried interest` would affect not only hedge fund
managers, but also people in limited real estate partnerships like Trump, asking `So you are proposing you'd like to raise taxes on yourself?`

`That's right. I'm OK with it,` Trump said. `You've seen my statements, I do very well, I don't mind paying
some taxes. The middle class is getting clobbered in this country. I know people in hedge funds, they pay almost nothing and it's ridiculous, OK?` Some interpreted those remarks as Trump agreeing to raise taxes on the wealthy.

OpEd: One-time wealth tax could cause stock market collapse

Political veterans such as Dick Morris observed that Trump was publishing a new book, The America We Deserve, which might get a boost in sales from the author/candidate's appearances on
TV talk shows such as "Larry King Live" (CNN), "The Early Show" (CBS), and the "Tonight" show (NBC), which invited him to talk politics.
Many of his ideas were dismissed as unworkable. For example, a onetime tax on the rich was labeled "harebrained" by economist and securities analyst David Jones, who said it could cause a stock-market collapse.
(A former IRS commissioner called it "wacky, constitutionally.") A few of Trump's proposals did show he was both forward-looking and ideologically flexible.

Raise graduated taxes on hedge fund managers

Q: Donald Trump says that the hedge fund guys are getting away with murder by paying a lower tax rate. He wants to raise the taxes of hedge fund managers, as does Governor Bush. Do you agree?

CARSON: The people who [oppose flat taxes]--that's called
socialism.

Q: What about the FairTax?

TRUMP: What I don't like about the FairTax is that if you make $200 million a year, you pay 10%, you're paying very little relatively to somebody that's making $50,000 a year, and has to hire H&R Block because
the middle class. The hedge fund guys won't like me as much as they like me right now. I know them all, but they'll pay more. I know people that are making a tremendous amount of money and paying virtually no tax, and I think it's unfair.

One-time 14% tax on wealthy to pay down national debt

What does Trump believe? Taxes: End corporate taxes. Lower individual rates. Consider a one-time tax on the wealthy to pay down the debt.

In 2011, Trump outlined a plan to end corporate taxes and significantly reduce individual taxes with a five-tier
income tax system. In his proposal, the lowest earners would pay a 1% income tax and Americans earning more than $1 million would pay 15%. Trump proposed a one-time 14.25% tax on America's wealthiest residents in order to pay down the national debt.

Source: PBS News Hour "2016 Candidate Stands" series
, Jun 16, 2015

4 brackets; 1-5-10-15%; kill death tax & corporate tax

My 5-part tax plan involves reforming the income tax. The government confiscates way too much of your paycheck. The tax code is also a very complicated system that forces Americans to waste 6.1 billion hours a year trying to figure it out.

What does
that tell you? It tells me that it's time we restore simplicity & sanity to the income tax. Here's my income tax plan:

Up to $30,000, you pay 1%

From $30,000 to $100,000, you pay 5%

From $100,000 to $1 million, you pay 10%

On $1 million
or above, you pay 15%

It's clear and fair. Best of all, it can be filled out on the back of a postcard and will save Americans big bucks on accountants and massive amounts of time wasted attempting to decipher the tax code.

Our country is hungry
for real tax reform. That's why we should implement the 1-5-10-15 income tax plan. And we need to enact [the rest of] my 5-part tax policy: kill the death tax; lower the tax on capital gains & dividends; eliminate corporate taxes; and a 20% import tax.

Cutting tax rates incentivizes a strong national work ethic

No doubt you work hard for your money--I know I do--and you should be permitted to keep more of it. Anything less creates a disincentive for a strong national work ethic. President Ronald Reagan saw it the same way: "The more government takes in taxes,
the less incentive people have to work."

As with most things, President Reagan had it right, But Reagan was merely echoing the economic thoughts of President John F. Kennedy, who had already said, in 1962, "The paradoxical truth is that the tax rates
are too high today and tax revenues are too low and the soundest way to raise revenues in the long run is to cut rates now."

Reagan and Kennedy's views prove that smart tax policy shouldn't be a partisan issue. It should be common sense.
If you tax something you get less of it. It's as simple as that. The more you tax work, the less people are willing to work. The more you tax investments, the fewer investments you'll get. This isn't rocket science.

Previously supported wealth tax; now supports Bush tax cuts

During last year's debate over the tax cuts, Trump was outspoken in his opposition to President Barack Obama's effort to deny an extension to the Bush-era tax cuts for people earning more than
$200,000 a year. "He's taking away a lot of incentives from a lot of people that produce a lot of taxes," Trump told Fox News, explaining that Obama's proposal would drive the wealthy out of the country. "It creates the wrong image.
You really have to keep the taxes down."

Ten years earlier, when Trump was also floating a run for the White House, he was singing a different tune.
The first proposal unveiled by his exploratory presidential campaign in 2000 was to impose a one-time 14.25% tax on the assets of people and trusts worth $10 million or more.

Repeal the inheritance tax to offset one-time wealth tax

I would impose a one-time, 14.25% tax on individuals and trusts with a net worth over $10 million. For individuals, net worth would be calculated minus the value of their principal residence. That would raise $5.7 trillion in new revenue, which
we would use to pay off the entire national debt [and shore up the Social Security Trust Fund].

My proposal would also allow us to entirely repeal the 55% federal inheritance tax. The inheritance tax is a particularly lousy tax because it can often
be a double tax. If you put the money into trust for your children, you pay the inheritance tax upon your death. When the trust matures and your children go to use it, they’re taxed again. It’s the worst.

Some will say that my plan is unfair to the
extremely wealthy. I say it is only reasonable to shift the burden to those most able to pay. The wealthy actually would not suffer severe repercussions. The 14.25% net-worth tax would be offset by repeal of the 55% inheritance-tax liability.

Opposes flat tax; benefits wealthy too much

It is unfair to the poor; eliminating the Earned Income Tax Credit [hurts] taxpayers at the lowest rungs of the ladder.

It is unfair to workers by taxing them for health insurance and other benefits.

Only the
wealthy would reap a windfall, because a flat tax would allow them to cash in interest payments and capital gains without paying personal income taxes.

I don’t believe that a flat tax could raise enough revenue to keep the government operating.

Source: The America We Deserve, by Donald Trump, p.186
, Jul 2, 2000

1986 tax laws destroyed incentives retroactively

It was 1986, the peak of the real estate market's boom. Some pundits down in Washington D.C., decided it was time to rein in a few overzealous developers, who, the pols claimed, were unfairly taking advantage of tax breaks and favorable
depreciation schedules. The 1981 tax code was revised and the Tax Equity and Fiscal Responsibility Act of 1986 (TEFRA) was passed, destroying just about any incentive anyone might have for investing in real estate.
And, you may remember, it included a stipulation that the tax laws be applied retroactively. Overnight developers and investors went bust by the thousands. The banks did just as badly. Here's why.
First, TEFRA eviscerated the tax shelters--in place to encourage investment--thereby leaving investors virtually no incentive to put their money into any type of development--including low-and moderate-income housing.

High tax rate encourages investment risk

[In the tax law change of 1986], the upper-income tax rate was lowered from 51% to 32 %. Investing involves risk. With a 51 percent tax, investors might take a chance on a new housing project.
If the project went south, the investor could recapture his losses in the form of a tax break. If an investor is taxed only 32 percent, why bother with the risk?

Personally avoids sales tax, but knows many people like it

Asked to discuss the idea of a national sales tax, Trump responded: “How do I feel about sales tax? I try to avoid paying it whenever possible. But the idea is an idea that a lot of people like very much.”

Source: nytimes.com/library/politics
, Dec 10, 1999

One-time 14.25% tax on wealth, to erase national debt

Trump wants to soak the rich, including himself. He proposed a 14.25% tax yesterday on the net worth of wealthy Americans.

Use the savings to save Social Security and slash taxes for the middle class

Increase his personal tax bill by at least $725 million.

Source: Boston Globe, p. A19
, Nov 10, 1999

Tax assets over $10 million, paid over 10 years

Trump proposed a 14.25% tax on the net worth of wealthy Americans. People and trusts valued at more than $10 million would be subject to the new tax. The original plan called for collection in a single year but, in a last-minute change,
Trump said he would allow more time for people having trouble liquefying their assets. “Let’s say 10 years,” he said.

The Christian Coalition Voter Guide inferred whether candidates agree or disagree with the statement, 'Increase Federal Income Taxes or Income Tax Rates'
The Christian Coalition notes, "You can help make sure that voters have the facts BEFORE they cast their votes. We have surveyed candidates in the most competitive congressional races on the issues that are important to conservatives."

The Christian Coalition Voter Guide inferred whether candidates agree or disagree with the statement, 'Permanent Elimination of the "Death Tax"'
The Christian Coalition notes, "You can help make sure that voters have the facts BEFORE they cast their votes. We have surveyed candidates in the most competitive congressional races on the issues that are important to conservatives."